Make money online. You’re a reader on this blog, because making money online is something that you want to do. And you want to do it better. That’s precisely what led me to meeting John Chow in the first place way back in 2006. A lot has changed since then, including the world of blogging, the astronomical growth of social media, the increasing accessibility of high quality user-generated video, and yes, making money online too. These all tie together.
But when you boil everything back down to the basics, when you dig right back down to the fundamentals, you’ll find that some things never change. If you want to make money online, if you want to make MORE money online, there are really only three ways you can do that.
Get More Traffic
All else held constant, which YouTube video is going to make more money for its creator? The one that gets 100 views or the one that gets 100 million views? This sounds like such a simple and obvious answer, because it’s almost always the first one that comes to mind when people think about how they can make more money on the Internet.
Of course, you need traffic. You need views and visitors. If everything scales as you’d expect it to scale, then the assumption is that if you can double the traffic to your website, you should also double your revenue. That’s only partly true, as you could be faced with the law of diminishing returns… or you could enjoy astronomical growth, as more traffic can lead to disproportionately bigger opportunities too.
Of the three ways you can make more money online, getting more traffic is the most difficult and is likely the one to provide the worst return on investment (ROI). The amount of time, effort and resources (including money!) you pour into increasing your traffic may not yield an equivalent increase in traffic. So, what’s the smarter thing to do?
Increase Conversion Rates
I’m going to use the example of affiliate marketing to illustrate this point, as it’s the easiest to understand in this context, but the same fundamental philosophy can be applied to almost any other form of monetization. Increasing traffic to your website can theoretically increase your revenue, but so can increasing the number of visitors who convert on the affiliate offer you’re promoting. A higher conversion rate results in more money.
Let’s say you run a humble website that gets 1,000 visitors a month. The one offer you’re promoting pays you $10 for every successful referral, and you’re currently converting about 2 percent of visitors. This means that, in an average month, you get 20 conversions (2% of 1,000), resulting in $200 in monthly revenue (20 x $10).
If you double your conversion rate and everything else stays the same, you’ll get 40 conversions for $400 in monthly revenue. If you double your traffic instead, you’d also get 40 conversions for $400. The net result is the same, but optimizing your page for higher conversions is arguably “easier” than increasing your traffic, particularly if you work with increasingly targeted traffic.
Earn More Per Sale
Again, I’m using terminology here in a more general sense. A “sale” is what you might have in mind if you’re selling your own products and services. A conversion on an affiliate offer is the same thing. A click on a CPC/PPC ad banner works in the same way too. If you can make more money per money-making action, even if your traffic and conversion numbers stay the same, that’s really the best way to make the most money possible.
Convincing one person to spend $1,000 is, theoretically, easier than convincing a thousand people to spend $1 each. In the world of business, this figure is typically called ARPU or average revenue per user. On average, how much money can you make from each user? This is the fundamental reason why it may be more in your favor to target higher value offers rather than trying to scale up smaller value offers.
If you’re engaging in influencer marketing, it makes more sense to try and land one $5,000 sponsored post than it is to try getting (and creating) 500 sponsored posts for $10 each. It’s probably a lot better for your readers too.
On some level, looking at making money online as the interaction between these three frameworks is an oversimplification. On another level, it absolutely holds up as true and it’s by looking at all three prongs that you can have the greatest impact. How are you going to make more money online?